Compounding growth

10% a month for a year isn’t 120%.

"We’ll grow 10% month over month" sounds modest. It’s actually more than 3× in a year. Founders, investors and forecasts live and die by this, and most people underestimate it badly.

The move

Count the doublings. Use the rule of 72 to find the doubling time, see how many fit into the period, then: 1 doubling = 2×, 2 = 4×, 3 = 8×. In between, roughly 1.5 doublings ≈ 2.8×.

Worked example

10% per month for 12 months

  1. Doubling time: 72 ÷ 10 ≈ 7 months
  2. 12 months ≈ 1.7 doublings
  3. Between 2× and 4×, a bit past the middle → about 3×
  4. (Exact: 1.1¹² = 3.14×)
  • Monthly growth × 12 is NOT the annual growth. Compounding always beats the simple sum.
  • Play with the slider below: small changes in the monthly rate make huge differences after two years.